You are devoted to raising your children and do the best we can while doing it. You give them toys to keep them entertained, books to pique their interest, and send them to good schools to ensure proper education. Unfortunately, you cannot predict when tragedy could unexpectedly strike and you would not be able run out.
But if it does, term insurance can help you be ready. Term insurance offers very cost-effective future protection for your family. Your family will receive a sizeable amount after your passing. A term insurance calculator will give you a clear picture of the available premium vs cover options.
Still not convinced? Let’s look at the seven most common excuses people give to avoid purchasing a term plan.
1) I’ve already started saving for my child’s future.
Raising a child is not cheap. By the time your child is two, you may have already spent a significant amount of money on them. From basic necessities like education to miscellaneous expenses (medical, travel, etc.) will need to be paid for your child. Where will the money for these expenses come from while you’re gone? There will be no assurance of financial stability for your loved ones in your absence because they may lack the resources to do so without term insurance. To what extent are you prepared to take that chance?
2) My children will be looked after by my spouse.
Technically, they will be. But handling a home, children, a new job, their private life and more all by herself can be extremely overwhelming, especially if they have to do it all alone?
Your partner will need to find work quickly if they have been a stay-at-home parent. Your parents or an uncle or aunt can help, but they usually can’t make up for the loss of a parent. Neither emotionally nor financially. It would help if you had a term plan even if you have already set aside a sizable saving for your dependents.
3) I’m covered by a life insurance policy as of right now.
The differences between the endowment plan and the term plan are subtle and could lead to misunderstandings. The endowment plan is an investment and insurance package. They release funds upon the insured’s death or after a certain period of time. However, the life insurance coverage provided by an endowment plan is typically much lower than that offered by a term plan. A term insurance policy with the same coverage will cost much cheaper.
4) My employer offers a term insurance policy.
Unless your employer is exceptionally generous, this will fall short. Additionally, people in the modern world routinely switch careers. Any term insurance coverage supplied by your employer is unlikely to survive once your work ends. What if you take some time off, launch your own company, or quit your job to pursue your dream? Use a term insurance calculator to determine how much your policy can cost.
5) I need to pay my EMIs first; I’ll get a term plan when I can afford it.
This line of reasoning overlooks the possibility that your loved ones won’t be able to afford the EMIs after your demise. Your regular sacrifices will be for nothing, and your family could end up homeless. The rule of thumb for ideal cover is ten times your annual salary.
6) I don’t have much disposable income after taxes.
For term insurance deductions under Section 80C, you can deduct up to Rs. 1,50,000 from your yearly taxable income for payments made on life insurance. These payments will not only help save money but keep your loved ones safe too. However, this is possible only if you choose to file returns under the old tax regime.
7) I’m still young; passing away is a distant future.
This is indeed the case most of the time, but are you willing to take the risk? Agreed that your physical health is better while you’re young. However, the chances of an accident, untimely sickness, mishaps, or misfortune, are the same throughout your life. Now think, if something did happen to you, would you want your children to be left uncared for? Do you feel like gambling with their future? You might reason that the premiums would be wasted if you lived past the coverage period. But isn’t that great news? Extra years of life are a benefit. Thanks to your term plan, you will live without worrying about your dependents’ future.
When is it time to purchase term life insurance?
An insurance policy’s premium will be less if it is bought earlier. In fact, the sooner, the better. Waiting until it’s too late will put your family in a situation you never wanted them to experience.